Friday, September 7, 2012

The Cost of MOOCs

Many of us await clear answers on the cost of MOOCs- the massively open online courses that have been in higher ed news of late. 

Startup companies like Coursera have not been forthcoming with their business models. Perhaps they don't need to, yet: there has been a huge splurge of venture capital because investors see higher ed as an enormous cash cow. Indeed, higher ed is a very remunerative business- even for non-profit schools. Just the loan finance business associated with higher ed is a multi-billion dollar market, annually.

The question is, how much do MOOCs cost?  The obvious expenses associated with producing quality MOOCs are for instructors, software and media production, quality control, cost of assignments and proctoring exams, and accreditation- whatever form that might take if actual credit is to be awarded. many of these costs are unknown at this point, because they courses are being offered in experimental, ad hoc manner. There isn't enough data to compute real net costs.

Apart from that, even if a MOOC itself is cost-free, it could still have *huge* financial impact in higher ed, because much of the material that MOOCs deliver is also being taught in our colleges. The most obvious overlap is in the intro coursework. For those classes, the case for a well-executed MOOC is quite good: the class sizes are already large and much of the material could benefit by a periodic reboot. But note: the large intro classes are also some of the very most profitable for a  college: they have a large enrollment, a very large ratio of students to instructors, and typically require very little overhead expenditure relative to the other courses.

One cost that has not been addressed at all, in my view, is the cost of using University resources to attract students to a MOOC. We must recognize that anything developed by an instructor on university property is a form of intellectual property to which a university has some fair claim. Even if the business relationship goes no further than publicizing that the MOOC will be taught by famous Prof. X at famous school XYZ, some real brand value is invoked: would you rather take a course from MIT or some less vaunted institution? The effect of this brand association is easy to overlook now because instructors are cheerfully and voluntarily jumping onto bandwagons headed into unspecified directions, just to hang out with the cool kids, while their institutions are in wait-and-see mode, just curious what will come of it all. (In my opinion, the most forward-thinking institutions already realize that MOOCs and other online ventures are billboards for their other courses. Institutions that can't make that up-sell may be disappointed to discover that they can actually lose enrollment.)

One thing is clear: at some point, MOOCs will start to affect higher ed's revenue streams... even if the courses are offered for free and if colleges accept credit derived from completing them with no charge for certification. Based on my tentative ideas about what proportion of current college coursework is appropriate for MOOCs, I estimate that as much as a quarter of all 4-yr college cost could be swept away from our colleges and universities in short order. That would have an enormous impact on higher ed revenue. We in higher ed need to ask ourselves whether the venture capitalists plan to deliver that to society as a savings... or to claim it as a profit. And it is entirely reasonable for startups like Coursera to profit- they're running large risks and exploring uncharted waters.

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